Apple Inc. Strategic Management

Currently, Apple Inc. (Apple) is one of the leading and influential technology companies in the world and has imposed a massive technological impact across the globe. Located in Cupertino, California in the United States, Apple was founded in the year 1976 and later incorporated in the following year. The company focuses on designing, manufacturing, and marketing of mobile communication and media devices as well as portable digital music players, personal computers, related software, applications, and digital content. According to Thompson, & Martin, Apple has made it possible to incorporate technology into our day to day lives basic requirement by using personal computers as their primary foundation (2010). The company’s impressive performance also received a significant boost by releasing an extensive array of impressive products like the iPod, iPhone, Apple TV, iPod classic, iPod touch, iPod Nano, iPod shuffle, iMac, MacBook Air, MacBook Pro, MacBook, iMac, Mac mini, and MacPro by the spring of 2011. The company’s focus on innovation has enabled it to maintain a competitive advantage while its exemplary marketing edge over other players in the sector has ensured increasing revenues. It is also critical to note that Apple faces exceptionally stiff competition within the technological industry environment.

Strategic Management

Strategic management refers to an ongoing practice of evaluating and controlling a business and the industries in which the company involves itself; assessing its competitors and setting goals and strategies that are intended to offer a competitive advantage over potential and existing competitors with regular assessment to determine the successes and challenges of the procedure in place (Witcher & Chau, 2010). Alternatively, strategic management can be viewed as a concept for promoting a systemic approach to strategy formulation that is in tandem with an organization’s goals, mission, vision and objectives coupled with measures for assessing the implementation choices and actions that the firm enlists in achieving its desirables and more specifically the purpose (Thompson, & Martin, 2010). Courtesy of their excellent strategic management, Apple Inc. is one of the few American companies that managed to come out of recession better and stronger and even more successful than comparable organizations. Through its ingenious business strategy, Apple happens to be the only company to maintain the number one spot as the most innovative company in the world’s coveted Fortunes List in 2007 before the recession and also came out triumphant in 2011 post-recession.

At Apple Inc. Strategic management refers to a set of actions and decisions that the firm uses in formulating and executing measures that offer competitive superiority over its peers and competitors within its operational environment so as to achieve the set organizational goals. Strategic management is instrumental in aiding managers in making the decision on how to position the company in a manner that offers it a competitive advantage within its environment (Witcher & Chau, 2010). In executing strategic management, one has to begin by defining the explicit strategy; an action plan describing resource allocation, business environment activities as well as how to achieve competitive advantage and Apple’s goals. The managers at the company have to decide whether they will carry out different activities or do the same actions in a different manner in relation to their competitors. Although Apple Inc. consistently changes its management strategy to suit the existing business environment, the company has strived to maintain its competitive advantage through focusing on their core competencies, developing synergy and creating value for customers all through. The company begins its strategic management process by executives evaluating the firm’s current positioning in relation to their goals, mission, and strategies. When undertaking strategic management, Apple Inc critically assesses the organization’s internal and external environments in order to highlight the vital aspects that may need change (Singh, 2008).

Furthermore, an objective examination of both the internal and external activities can help the company in redefining its mission or goals, or even in the formulation of new strategies at the corporate, business and functional levels. Most business observers attribute Apple’s admirable performance during the globally unfavorable financial times in 2008 to the company’s great innovation capabilities. Apples consistent product improvement such as laptops’ enhancements, organizational structures changes, appropriate reward system and the provision of required resources has ensured the firm’s success over time.

Internal environment

All functional organizations experience areas of strength and weaknesses in different spheres of the business. It is also crucial to note that no organization can either be entirely weak or strong in all areas (Grant, 2007). I will enlist the use of the VRIO framework for the purposes of carrying out an audit of the internal environment. The frameworks are Value, Rarity, Imitability and the entire Organization hence VRIO. Apple Inc. products offer value for the customers; for instance, the iPhone uses the latest technology, fast, easy and straightforward way of usage and the benefit of having an all in one device. Since the technology that is used in making Apple products are rare as well as unique; the company enjoys rarity, and that is why Apple Inc. products have a status symbol attached to them throughout the world

(Shekhar, 2010). Although the phone has been experiencing a few problems like call dropping and slow internet connection which may lead to Apple losing some customers, the fantastic publicity and the status that comes with owning an iPhone will certainly ensure that its customer base remains intact. On imitability, the Apple Inc. products are incredibly challenging to imitate; however, there are available phones in the market that offer a number of similar features those of iPhone. Comparable companies in the same field who might have had the leverage of knowing some of the flaws that are associated with iPhone might take advantage a produce a superior gadget which might provide an imminent threat to Apple Inc. (Singh, 2008). In terms of the organization in general, Apple Inc. has exhibited tremendous effort in creating and maintaining a huge brand name thereby offering the company a humongous competitive advantage over its competitors. For further evaluation of Apple’s internal factor, I would recommend the use of an internal Factor Evaluation (IFE) Matrix. However, as shown in the model below showing the VRIO framework for Apple Inc.

 

Competencies and Resources    Value    Rarity    Imitability    Organization    Competitive Advantage

Brand Name    Yes    Yes    Yes    Yes    Sustained

Simplicity    Yes    No    No    Yes    Parity

Hardware    Yes    No    Yes    Yes    Temporary

Software    Yes    No    No    No    Parity

Table showing the VRIO framework for Apple Inc.

 

Apple has a considerably substantial competitive advantage over its competitors, and therefore the company should take deliberate steps to explore both its internal and external positions as it did in coming up with the iPhone. Apple Inc. has demonstrated a useful capability in brand name development, prudent use of advanced technology and seamless engagement of its user interface (Shekhar, 2010). Further Apple Inc.s’ internal assessment shows that the company consistently engages Wall Street in order to realize increased profits, has significantly high ethical standards and even though Apple provides a relaxed working atmosphere with a quiet leadership, the firm is very demanding. Also, the company’s operational focus offers flexible latitude for releasing incomplete products thereby maintaining a grip on the market and allowing room for improvement.

External environment

It is critical to note that the external environment of a company’s activities has a direct effect on the company’s performance. Apple’s executives should be up to date with the existing political, economic, social and technological factors that have an influence on the company (Grant, 2007). The following is a PESTL analysis of Apple Inc. On the political aspect; Apple obtains more than half of its business from outside the borders of the United States.

Consequently, unfavorable international relations, terrorism, and wars are capable of affecting the company’s significantly; for instance, the current trade war between the United States of America and China. A rather disturbing fact about the political environment is that the company has little or no control at all over the matter (McGee, Thomas & David, 2005). Apple also manufactures a good number of its products and components outside the United States in countries like China, Cork, Ireland, Korea, and the Czech Republic and therefore it goes without saying that bad political ties between the United States and other nations might lead to unfavorable business outcomes for Apple Inc.

On the economic front, there are significant lessons from the considerable impact that Apple suffered during the past financial crisis (Shekhar, 2010). The unemployment rate significantly increased, and the inflation rate shot up, and due to the fact that people view Apple products as luxurious a considerable number of customers notably cut down on their spending on the company’s products. The then constant fluctuation in the value of the United States’ dollar equally had an adverse effect on Apple’s products. However, after learning from the experience, the company has cautioned itself against such an occurrence by purchasing foreign currencies. Finally, on a positive note, there has been an increasingly remarkable revenue growth of Apple Inc. in the global market

On the social factors, the unique quality and design of Apple’s products have been on forefront throughout the history of the company (Singh, 2008). Globalization plays a critical role in the success of Apple’s products since currently all across the globe diverse individuals and communities alike cannot do without entertainment media and communication gadgets thereby creating a market that has enabled Apple Inc. to establish an international presence.

Additionally, there is an increased purchasing power of people hence increased purchase of luxury items such as iPhone, iPods, iPads and more recent variants of the company’s latest technology packaged in the form of iPhones. The possession of devices from Apple Inc. is viewed as a symbol of status in most countries, a factor that has immensely contributed to the increase in sales of the company’s products (Shekhar, 2010). The spontaneous and accelerated growth of the music industry has also immensely contributed to the growth of the Apple market both in the cyberspace and their retail outlets. iTunes, which is a product of the Apple company happens to be the leading virtual music store globally. The fact that all Apple products define a sense of modern lifestyle makes the company a primary beneficiary of social factors.

Owing to Apple’s premium investment in product research, innovation, and development field, the company’s products are on top of rankings in terms of technology. The global technology is changing at a very high rate, and even though the broadened international market increases potential customers, it has also brought on board a number of extra competition. The accelerated pace of technological change has led to a drastically shorter product life cycle (Dess, 2006). Apple Inc., therefore, takes advantage of the fast-changing speed of technology to regularly and consistently introducing the latest products in the market which ultimately puts them ahead of the park. Finally, on the legal factors, Apple Inc is facing a number of lawsuits. In China, there is a legal battle on who is the legitimate owner of the iPad trademark and its associated rights of usage. In the United States alone there are over 20 complains in regards to Nokia patents. There are also additional lawsuits by Nokia of 13 violations on licenses by iPod touch, iPhone and iPad.

Additionally, further eternal scanning analysis reveals that there is an increasing demand in education, businesses, governments, and consumers. Rising income in Asia and other emerging countries coupled with the acceptance of nomadic and mobile computing have also opened up more opportunities (McGee, Thomas & David, 2005). Rapidly changing technology, an extremely competitive market, copyright violations, and weak multiple distribution networks presents threats to the company’s success. Other inhibiting factors are outsourcing of manufacturing, continuing R&D timelines and the possible need for new composition of the management team.

SWOT analysis

SWOT analysis involves the searching and examination of strengths, weaknesses, opportunities, and threats that may in one way or another have a significant influence on the performance of Apple Inc (Angwin, Cummings & Smith, 2005). It is practical to obtain external information regarding opportunities through a number of ways; however, customers, professional journals, suppliers, bankers, and government reports, as well as friends of the organization, may offer invaluable insight to the responsible team of individuals. The analysis provides managers and executives with critical baseline information regarding the company’s internal and external environment and also assists in evaluating whether the company has fulfilled its primary mission. The competencies with which Apple gadgets perform is just but one way that the company exhibits its core strengths. Dess defines core competencies as the capabilities that competitors and customer value find extremely difficult to imitate (2006). A company acquires significant leverage over its competitors when it establishes a mechanism of linking internal strength to external opportunities (Carter, Clegg, and Kornberger, 2008).

Consequently, in the event of a company being vulnerable to environmental threats, significant challenges are bound to occur in relation to performance and profitability. The considerable strengths that Apple Inc. enjoy include the capacity to access adequate financial resources needed to facilitate innovation, availability of modern facilities, excellent customer loyalty to brands associated to the company and the cost advantages related to its products. The company also has the added benefit of patenting all its products. The superior research developments, above board customer service, expert technological awareness as well as process efficiency also elevate Apple status and performance (Singh, 2008). Through strategic partnerships with other established brands, Apple Inc was able to achieve tremendous success with iPod and iTunes. The company also capitalized in gaining consumer confidence and market exposure courtesy of partners’ advertisements. Among the company’s internal weaknesses is the lack of a wide global distribution network. The increasing number of counterfeit smartphones from some Asian countries, especially China, at considerably low prices has created a new perspective on how clients view their Apple gadgets. A significant number of potential customers of Apple’s products as well as frequent users of computer-based products hold the opinion that other than the staggering difference in price, the competing products tend to offer almost similar services (Shekhar, 2010). More on the point as mentioned earlier is that Samsung has particularly given Apple Inc. a run for its money through introducing products that costs relatively low but which offer the same functionalities as those of Apple products. The internal weaknesses that Apple Inc. experiences especially in their core products almost always lead to additional competition in the market. There are many external opportunities that Apple can utilize to its advantage. The opportunities include the expanding new market for Apple products in both the Asian and African continents coupled with the general exponential market growth for the company’s products.

 

A SWOT analysis of Apple Inc.

 

 

Apple Marketing Strategy

Apple Inc. enlists the use of a number of marketing strategies in order to realize sufficient proceeds to power and sustain the company’s goals, mission, vision as well as objectives. Marketing strategies are an integral part of strategic management since it is the primary business of the executives and the company to generate adequate financial resources to keep the firm up and running. According to Carter, Clegg, and Kornberger, marketing strategy is the primary goal of improving sales and gaining a competitive advantage that is sustainable (2008). Marketing strategies also include all the basic, short and long term marketing activities as well as the analysis of the initial strategic baseline survey of the company and the selection, formulation and evaluation of measures that will ensure the market success of the company’s products and contribute to the attainment of the company’s goals. One of the most successful marketing approaches for Apple Inc. is the company’s unique branding strategy.

In order to favorably compete for a cross a number of high and very competitive markets, Apple Inc. capitalizes on its branding strategy. The company primarily relies on customer loyalty, their excellent reputation and the luxurious nature of their products to retain and attract new buyers (Shekhar, 2010). Apple Inc has consistently won in the CMO award for marketing strategies for the company’s excellence in marketing for over the past decade. Apple has managed to attain high sales and a vast market share, and its customers are usually noticed and are very familiar with the brand name and associated products. Therefore Apple Inc. clients are willing and able to buy the company’s products at a premium regardless of their competitors’ products and pricing due to the Apple brand power.

One of the benefits associated with the branding strategy is the emotional appeal. According to Angwin, Cummings & Smith, emotional appeal cements a customer’s interest in a brand’s products (2005). When a customer is faced with a situation of choosing between competing products the customer will most likely settle for a familiar brand name even if it is comparatively expensive. Apple Inc. has also managed to create excellent customer loyalty through working hard to ensure that clients are not disappointed during their inaugural experience with the company’s products; at times leading to client referrals. By building trust within its customers, Apple Inc. has the capacity to launch an entirely new product successfully, and customers will buy based on their previous positive experiences that are associated with the company’s commodities.

Conclusion

In conclusion, it is an uphill task competing with Apple Inc. from a strategic management point of view. The giant technological company has a massive investment in research and development and is also very proactive thus having the edge over its competitors within the industry. The hard work that Apple puts in its production is exhibited in the quality of their products. The company also needs to revamp its customer support and improve on the areas that they are lacking. The adoption of both the emerging and strategic differentiation planning will see to it that Apple continues to incorporate latest technologies and innovations into their products in order to retain their already loyal customers and equally attract a new client base. A proper and well focused strategic management is of paramount importance in ensuring that Apple Inc stays its course and even steer the company into greater heights of success. Apple is also supposed to make a paradigm shift from capitalizing on the customers’ point of view to a complete marketing integrated system revolving around the satisfaction of its customers. Adoption of the strategy will ensure that the company maintains its global competitive edge and also broaden Apple’s market. It is therefore mandatory that Apple Inc. should carry out an assessment of future political and regulatory environment as well as the global economic climate before planning and implementing a strategic management plan.

 

References

Angwin D, Cummings S & Smith C (2005), The Strategy Pathfinder: core concepts and Micro-cases, Oxford: Blackwell.

Carter, C., Clegg, S.R., and Kornberger, M. (2008). A very short, fairly interesting and reasonably cheap book about strategy, London: Sage.

Dess, G (2006), Strategic Management: Creating Competitive Advantage, London: McGraw-Hill.

Grant R (2007), Contemporary Strategy Analysis, Oxford: Blackwell.

McGee J, Thomas H & David W (2005), Strategy: Analysis and Practice: Text and Cases, Maidenhead: McGraw Hill.

Shekhar, G. V. S. (2010). Business policy and strategic management. New Dehli [u.a.], Internat. Publ. House.

Witcher, B., & Chau, V. S. (2010). Strategic management: principles and practice. Andover, Cengage.

Thompson, J. L., & Martin, F. (2010). Strategic management. Andover, Cengage Learning.

Singh, M. (2008). Strategic management and competitive advantage. New Dehli, Global India Publ. Pvt.

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